Correlation Between Franklin Floating and Invesco Bond

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Can any of the company-specific risk be diversified away by investing in both Franklin Floating and Invesco Bond at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Franklin Floating and Invesco Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Floating Rate and Invesco Bond C, you can compare the effects of market volatilities on Franklin Floating and Invesco Bond and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Franklin Floating with a short position of Invesco Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Floating and Invesco Bond.

Diversification Opportunities for Franklin Floating and Invesco Bond

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Franklin and Invesco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Floating Rate and Invesco Bond C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Bond C and Franklin Floating is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Franklin Floating Rate are associated (or correlated) with Invesco Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Bond C has no effect on the direction of Franklin Floating i.e., Franklin Floating and Invesco Bond go up and down completely randomly.

Pair Corralation between Franklin Floating and Invesco Bond

If you would invest  1,500  in Franklin Floating Rate on September 14, 2024 and sell it today you would earn a total of  352.00  from holding Franklin Floating Rate or generate 23.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Franklin Floating Rate  vs.  Invesco Bond C

 Performance 
       Timeline  
Franklin Floating Rate 

Risk-Adjusted Performance

34 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Floating Rate are ranked lower than 34 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental indicators, Franklin Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Invesco Bond C 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Invesco Bond C has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Invesco Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Franklin Floating and Invesco Bond Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Floating and Invesco Bond

The main advantage of trading using opposite Franklin Floating and Invesco Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Floating position performs unexpectedly, Invesco Bond can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Invesco Bond will offset losses from the drop in Invesco Bond's long position.
The idea behind Franklin Floating Rate and Invesco Bond C pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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